Project McDonalds

Executive Summary

The purpose of this project to know that how Operation Management Strategies & Total

Quality Management Strategies are made, implemented and how they impacts on the

organization. For this purpose we selected McDonalds to obtain necessary data and its

analysis.

With the completion of this project we have learned that how Operations Management

Strategies & TQM Strategies are implementing and its impacts on the organization.

Operations Management Strategies plays very important role in achieving an

organizational goals. By using these strategies an organization controls and maintains all

its operations. So these should make after a comprehensive marketing analysis, according

to capabilities and resources of an organization.

Total Quality Management enables an organization to have improved products, high and

competitive product environment and customer satisfaction

Operations Management Strategies in McDonalds are being made by top management.

These strategies are implements in all branches under instructions of top management,

which are distributed to all branches in written form. So there are operations mangers in

all branches that control all operational activities. These strategies impacts positively and

helps to achieve the goals.

By Naveed Aslam Gondal 1


Introduction to Project

The purpose of this project is to know how the Operation Management Strategies and

Quality Management Strategies occur in Fast-food sector, especially in McDonalds,

and how these strategies are implemented.

The basic Operations Management Strategies are:-

1. Design of goods and services

2. Managing quality

3. Process strategy

4. Location strategy

5. Layout

6. Human resource

7. Supply chain management

8. Inventory management

9. Scheduling

10. Maintenance

Some features of quality management strategies are:

1. Product Quality

2. Training

3. Continuous Improvement

4. Customer Satisfaction

So we will analyze how these strategies are being implemented in McDonalds.

Methodology

In this project we studied all the above mentioned operational strategies and tried to get

the theme of these strategies. Also got some information from internet and then by

analyzing the base of these strategies we implemented our knowledge in practical

working environment of the organization i.e. McDonalds.



From day one, McDonald’s believed in forging new opportunities. The

same holds true today, and it’s this kind of philosophy that will launch

your career. For starters, Ray Kroc, our founder and inspiration,

parlayed exclusive distribution rights of an innovative milkshake

maker into the first-ever franchise in Des Plaines, Illinois.

Later, Ronald McDonald proved another huge idea from a set of

wonderful folks. Introduced in his first TV appearance, Ronald

became recognized as “the smile known around the world.” Today,

he is as recognized as Santa Claus.

In yet another example of empowered big-thinking,

franchisee Jim Delligatti invented the Big Mac and changed

hamburgers forever. As you can see, broad vision, big

ideas, and a family of great people fuel our success. It’s

true, new employees today are our leaders tomorrow.

McDonald's a Global Phenomenon

Formed in 1954, McDonald's brand is the leading global foodservice retailer with more

than 30,000 local restaurants serving nearly 50 million people in more than 120 countries

each day. The rich history began with founder Ray Kroc's strong foundation. McDonald's

vision and commitment of our talented executives is to keep the shine on McDonald's

arches for years to come.


McDonald's in Pakistan

Aiming to be the world's best quick service restaurant experience, McDonald's started its

operations in Pakistan in September 1998 and is a leading fast food service retailer for its

valued customers. With a strong belief in the phrase when it's green it's growing.

McDonald's Pakistan is growing with the focus to provide friendly and quick service

experience to our customers.

Today millions of Pakistanis place their trust in McDonald’s everyday to provide them

with food of a very high standard as well as good service. In the past five years, the

response to McDonalds coming to Pakistan has been overwhelming. Today Lakson

Group Companies has taken over McDonalds Corporation, USA and a local partner

making it a 100% owned and operated Pakistani company. McDonalds located in

Pakistan are currently employing about 3,000 Pakistanis and each store is managed by

Pakistani managers. They have also contributed in other ways than food service.

McDonalds has investment of over Rs. 30 billion in the country and payment of taxes and

duties amounting to more than Rs 10 billion Since McDonalds is doing so well in

Pakistan they will continue to grow and add more stores in more cities in the future.

The Team

To realize the McDonald's service vision, we believe in strengthening our team and

ensure to deliver the right skills and knowledge to the right person for getting the right

job. Our strength for making our strong team players to shine under the Golden Arches

lies in the People Promises, we focus to deliver:

McDonald's 5 People Promises

1. Resources Recognition

2. Values Leadership Behaviors

3. Competitive Pay Benefits

4. Learning Development Personal Growth

5. Resources to get the Job Done


McDonald's Mission

McDonald's mission is to be our customers' favorite place and way to eat with inspired

people who delight each customer with unmatched quality, service, cleanliness and value

every time ...we invite you to be the part of this winning team and give yourself an

opportunity to grow with the family of people striving to create smiles on the faces of

millions of people everyday.

Management Development Program

McDonald's Management Development Program provides with an opportunity to develop

your knowledge base with hands on practical exposure to turn into a diversified business

entrepreneur. And with the recent job openings McDonald's welcome you to the world of

opportunities under the golden arches!!!



Operations Management in McDonalds

From our research we came up with the following operation management strategies being

implemented by McDonalds:

Goods & Service Design

Quality

Location Selection

Layout Design

Human Resource

Supply Chain Management

Maintenance

The McDonald has the above stated strategies out of the 10 OM strategies. These are

explained as under:

Goods & Service Design

The tangible goods and intangible services are provided by McDonalds and the

homogeneity is maintained globally. The goods and services are provided on in a package

that’s why the company lies in 50% in goods production side and 50% in service

providers. In Pakistan the same level of services is offered by McDonalds, compared to

international level.

Strategies

a) Advertisement: McDonalds implements this strategy by making aware people

about their products and services through advertising on TV, newspapers,

brochure.

b) Customers Relationship: The personals of customer relationship department

convince the people and customers about services.


Results

1. Inside the McDonalds:

a) Achieving Objectives: By implementing this strategy McDonalds is achieving

its objectives, i.e. it’s earns profit, customers are satisfying, and the services

offered to customers sharing in revenue growth of the country. So it helps to

make further plans, strategies, making strengths, expansion of franchises etc.

b) Business Development: As customers become attractive therefore McDonalds

opens new branches. So it helps in expansion of business.

2. Outside the Organization:

Improving social life: These strategies are improving quality of life as well as

the social and environmental awareness in general public.

Quality

The company really maintains its product quality. A lot of expenditure is made in the

quality maintenance and improvement researches. McDonalds maintains the following

quality rules:

Maintaining strict standards of quality and safety, so that the customers can

feel comfortable fitting any of the food products into their personal eating

styles.

Serving a variety of nutritious, high-quality food products and portion sizes,

including new salad, fruit, and vegetable offerings and Happy Meal choices.

Providing nutrition information to help customers make smart choices that

address their individual lifestyle needs.

Informing the customers about energy balance and fun, practical ways to

incorporate physical activity into their everyday lives.

Motivating kids to be active by engaging Ronald McDonald as ambassador

for play and activity.


Sponsoring major sports competitions, including the Olympics and the FIFA

World Cup soccer matches.

Location Selection

Generally it has been observed that McDonald follows the different locations and outlets

according to the specific area.

Strategies

McDonalds makes and implement its location strategy in following way: -

a) Business Areas: They open their branches in business areas where they target the

corporate people and the working class to dine in and have their timeout for

breakfast and lunch.

b) Play Lands and Shopping Areas: They try to introduce their services according

to target customers, i.e. capture the customers in the amusement parks and in

markets such as the branch in Fortress Stadium, Model Town link road etc.

Results

a) Convenience: Customers feel comfort ability when a branch is in near vicinity to

their work place.

b) Customer Gaining: Due to the good environment the company has an ability to

gain their customers to their locations.


Layout Design

This strategy refers to the overall working and general environment offered by

McDonalds. It includes the personnel level, service and product layout, interiors and

exteriors etc.

Strategies

a) Exterior: McDonalds sets its premises in proper manner to handle any number of

customers easily. The building design is standard world wide but it may be have

some difference in size or in exterior according to the location. It enables them to

save time, satisfy their customers, comfortable environment for both employees

and customers.

b) Interior: McDonalds uses the same interior pattern as it’s used internationally. It

may vary according to the premises size.

Results

a) Brand Recognition: Homogeneity in layout design and franchise settings strikes a

clear brand image in the minds of the customers. The efficiency level of personnel

also leaves a good impression on the minds.

b) Customer Satisfaction: Through a universal image, layout design and the brand

image in the minds of customers results in customer satisfaction.


Human Resource

Being partially in pure services and goods production sector, McDonalds exercises a

good strategy for its human resources e.g.

Right Person on Right Job: McDonalds allocates its human resource in different

areas according to the abilities, qualifications and experiences of employees. They

appoint a marketing expert for marketing, accountant for accounts etc.

Trainings: McDonalds provide training opportunities for its employees who need

training in a particular area. So it enables the organization to achieve its goals

efficiently.

Separate Departments for Different Functions: McDonalds has different

departments for different functions. Marketing department consists of marketing

experts who perform marketing analysis and finance department consists of finance

experts who arrange and manage finance etc.

Proper Utilization of Resources: As there are many experts in different areas, so they

use all available resources and opportunities properly. They provide services to their

customers efficiently, which satisfies customers and they achieve their goals

successfully.

Employee’s Job Satisfaction: McDonalds provides training opportunities to its

employees to improve their skills. So it results in enhanced employee performance

and they become more interested to work in good manner, which gives a good

reputation to the organization.

Competency: McDonalds trains it’s employees of all departments to enhance their

capabilities and to improve their skills and therefore employees provide right product


to right customers on right time. So it enables the organization to compete in the

market.

Supply Chain Management

These strategies determine what is to be made and what is to be purchased. So

McDonalds follow these strategies and have a just-in-time inventory system. Which

means that the orders are placed as the raw material comes to near finish. McDonalds

maintain no inventory levels for perishable goods.

Suppliers

The major suppliers of McDonald’s in Pakistan are as follows:

Dawn Breads for Buns

Choudhry Dairy Limited for dairy products

Walls Ice Cream

Coca-Cola Ltd. for drinks

Pakages for packing

Maintenance

The overall maintenance process of McDonalds is that they emphasize on the

maintenance of the product quality, the human resources used within the organization, its

location and layout designs.

They train their employees of all department6s regarding their job, so they can handle

their customer and work as well which helps to maintain their status quotas. McDonalds

is among the companies which are partially involved in the production of goods and


services, so a proper maintenance system within the organization strengthens the

goodwill and reputation.



Total Quality Management

Management of an entire organization so that it excels in all aspects of products and

services that is important to the customer. In simple words we can narrate total quality

management as a continuous quality improvement process.

So McDonalds also practice the strategy of total quality management and tries to enhance

its efficiency & affectivity level by working in different areas such as continuous

improvement, quality of goods and services, training, and customer satisfaction.

Product Quality

The ability of a product or service to meet customer’s needs is termed as quality.

Therefore McDonalds works a lot in the quality improvement of its goods by improving

ingredients and nutrients of the food stuff.

Some recent nutrient’s quality improvement information is as under:

For people concerned about food allergies, we have consolidated all allergen

information into the ingredient statement for each menu item so that you have

one current source of information. Please check these listings regularly as

ingredients in menu items may change.

Popular kid’s meal choices:

Happy Meals

Mighty Kids Meals

The nutrition information is derived from testing conducted in accredited laboratories,

published resources, or from information provided from McDonald’s suppliers. The

nutrition information is based on standard product formulations and serving sizes. All

nutrition information is based on average values for ingredients from McDonald’s

suppliers throughout the world. Variation in serving sizes, preparation techniques,

product testing and sources of supply, as well as regional and seasonal differences may

affect the nutrition values for each product. None of our products are certified as

vegetarian. This information is correct as of January 2007.


Training

In the next step of TQM, McDonalds puts it attention on its human resources. The

objective of training their human resources is to create a balance in the overall working of

employees. Thus they try to create a connection between the quality of a product and the

ability of the employees. In McDonalds nearly every employee is given training for its

work. e.g. the cashier is trained for all the cash handling, floor manager is polished

against his degree in hotel management. And all the other staff is trained accordingly.

Continuous Improvement

The quality management strategies of McDonalds for product quality improvement and

employee training and development put the company on the road of continuous

improvement in all its functions. Continuous improvements fulfill the needs of the

customers according to their desires or requirements and also make its products more

competitive. This continuous improvement also includes some other factors like

employee empowerment, benchmarking a quality standard & maintaining just in time

inventory system etc.

Customer Satisfaction

McDonalds pays a lot of attention on the satisfaction level of its customers. The

improved quality standards, well trained employees and a continuous learning desire of

McDonalds results in increased level of satisfaction of the customers. Like when the

quality is improved and the personnel attending the customers is well trained and the

overall service environment is improved then there is no room left for customer dis-

satisfaction.



After the analysis of our project regarding the application of Ten OM Decision and TQM

we have concluded our report as under:

McDonalds is maintaining its product quality according to the international

standards

The customization of the product and services according to the culture of

Pakistan has resulted in customer satisfaction

McDonalds has properly covered the business areas with in cities e.g. Lahore

McDonalds maintains a good environment in every premise.

McDonalds has a learning environment for employee development and

customer satisfaction.

Suggestions

In the end of our report we have following suggestions:

McDonalds should revise its product prices.

Company should work on all of its products

There is still a lot of opportunities for McDonalds to increase number of

outlets

McDonalds in Pakistan should follow its international trend of sponsoring

mega events e.g. Domestic Cricket Tournaments.


References:

www.mcdonalds.com

www.mcdonalds.com.pk

www.answers.com/what_is_TQM

Bibliography

Operations Management by Jay Heizer & Barry Render 7th Edition



Date post:	29-Nov-2014
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Project McDonalds

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